Risk Score
Pending analysis
Investment Range
$113,640 - $288,200
Franchise Fee
$25,000
Total US Locations
453
Business Summary
Roto-Rooter operates a business focused on sewer, drain, and pipe cleaning services. Franchisees also have the option to offer additional services like septic tank cleaning, plumbing repair, pipe inspection, and water restoration services to the public within a designated geographic area. The business utilizes the Roto-Rooter brand name and proprietary methods for its operations.
Corporate History
Roto-Rooter Corporation was founded by Samuel O. Blanc in 1935 in Des Moines, Iowa, initially manufacturing equipment for cleaning sewers and drains. The business was incorporated as Roto-Rooter Corporation on February 13, 1936, and began licensing independent businesspersons to use its system and trademarks that same year. In July 1980, Chemed Corporation acquired Roto-Rooter Corporation through a merger, and it became a wholly-owned subsidiary. By August 1984, Chemed transferred all of Roto-Rooter's stock to Roto-Rooter Group, Inc., which remains a wholly-owned subsidiary of Chemed.
Financial Overview
Investment Range
$113,640 - $288,200
Franchise Fee (Low)
$25,000
Franchise Fee (High)
$75,000
Equipment Costs (Low)
$44,640
Equipment Costs (High)
$138,200
Working Capital
$13,000
Audited Financials
Yes
Offers Financing
No
Audit Opinion
Unqualified opinion
Financial Health Notes
Roto-Rooter Corporation's parent company, Chemed Corporation, has strong financial health with no debt outstanding at the end of 2024 and 2023. Their current ratio was 1.4 at December 31, 2024, and they are in compliance with all debt covenants. Management believes their cash flow from operating activities and available lines of credit are sufficient to fund obligations in the near and long term. Chemed Corporation unconditionally guarantees Roto-Rooter Corporation's obligations to its franchisees. However, the VITAS Healthcare Corporation segment, also owned by Chemed, is involved in ongoing regulatory matters and litigation concerning Medicare billing, which could lead to defense costs, potential payments, and diversion of management time.
Financing Details
Roto-Rooter Corporation does not offer any financing arrangements, either directly or indirectly, to its franchisees.
Performance Metrics
Total US Locations
453
Franchised Units
337
Corporate Units
116
Avg Square Footage
1,200
Franchising Since
1936
Legal & Compliance Analysis
Recent Litigation
Yes
Bankruptcy
No
Litigation Count
1
Litigation Summary
Roto-Rooter Corporation's ultimate parent company, Chemed Corporation, owns VITAS Healthcare Corporation. VITAS was selected for an audit by the Office of the Inspector General (OIG) concerning elevated level-of-care hospice services provided from April 2017 to March 2019. In July 2022, the OIG's final audit report recommended VITAS repay approximately $140 million. Following this, in August 2022, VITAS received a demand letter from its Medicare Administrative Contractor (MAC) for $50.3 million. VITAS deposited this amount under an 'Immediate Recoupment' process to preserve its appeal rights, and is currently appealing the remaining claims through the Office of Medicare Hearings and Appeals process, having already received a refund of $3.34 million. In February 2025, an Administrative Law Judge largely sided with VITAS for the appealed claims, finding that VITAS's care met Medicare's standards for most of the billing days. The Centers for Medicare & Medicaid Services (CMS) may appeal this ruling, and the MAC has not yet provided a new calculation of the amount to be returned. Roto-Rooter Corporation notes that this ongoing situation can negatively impact the company through defense costs, potential payments, withholding of governmental funding, diversion of management time, and related publicity.
Bankruptcy History
Roto-Rooter Corporation has no bankruptcy history to report for itself or its key personnel.
Agreement Terms
Initial Term
10 years
Renewal Term
10 years
Renewal Conditions
To renew their franchise agreement, Roto-Rooter franchisees must not be in default of their current agreement at the time of expiration. Roto-Rooter Corporation will offer a new 10-year franchise agreement on terms and conditions then offered to other renewing franchisees. Roto-Rooter Corporation reserves the right to make reasonable revisions to the terms of the agreement upon renewal. Franchisees will receive the new agreement at least 60 days before their current agreement expires and must accept and return fully executed copies by the expiration date.
Training & Support Program
Franchisor Assistance
Before opening, Roto-Rooter Corporation makes the current Roto-Rooter brand equipment and parts line available for optional purchase at prevailing prices, with a 5% rebate on purchases paid within 30 days. During operation, Roto-Rooter Corporation provides general management, engineering, and research services and advice concerning the system and use of the marks. For water restoration services, they may offer training and certifications for an additional fee. Annually, Roto-Rooter Corporation spends at least 15% of the aggregate monthly franchise fees received from U.S. and Canadian franchisees on national market research, advertising, and promotion of the marks and services. They also consult franchisees before implementing substantial changes to the system's trade dress and reimburse reasonable out-of-pocket expenses for franchisee participation in certain trademark litigation. There is no formal initial training program prior to opening, nor are additional training programs required once operations commence.
Ongoing Support
During operation, Roto-Rooter Corporation provides general management, engineering, and research services and advice concerning the system and use of the marks, which are made available to all franchisees. If franchisees perform water restoration services, Roto-Rooter Corporation may provide training and certifications for an additional fee. Annually, the franchisor spends at least 15% of monthly franchise fees on national market research, advertising, and promotion. Roto-Rooter Corporation also consults franchisees before implementing substantial changes in the trade dress of the system and reimburses reasonable out-of-pocket expenses for franchisee participation in certain trademark litigation.
Franchise Requirements
Ideal Candidate Profile
Roto-Rooter Corporation seeks qualified individuals who are prepared to be actively and full-time involved in their business, or whose majority owners will be. While on-premises supervision is recommended, it is not strictly required. The ideal candidates will operate a business offering sewer, drain, pipe cleaning, and related services, and will be capable of competing with both local and national companies in the mature market for these services.
Industry Experience Required
No
Management Experience Required
No
Sales Experience Required
No
Technical Skills Required
No
Operational Details
Location Type
Hybrid
Owner Participation
Full-Time
Territory Type
Exclusive
Territory Size Requirements
Roto-Rooter Corporation defines franchise territories typically by city or county, as specified in the Franchise Agreement. The territory size, once established, will not be altered due to population increases or other contingencies. Minimum local advertising expenditures are calculated based on the population within the franchisee's territory.
Staffing Notes
Initially, Roto-Rooter Corporation assumes that franchisees will personally perform cleaning services. However, the Franchise Agreement does not restrict franchisees regarding who they can hire for on-premises supervision, though the franchisor must be informed of the manager's identity. Franchisees are not required to place any restrictions on their managers.